It’s pay day. You look at your payslip, but something doesn’t appear to be right.
You ask yourself: ‘Have I paid too much tax?’
The same may have happened when your Self Assessment calculation arrived from HMRC.
It’s quite possible that, for one reason or another, you may have paid too much at some stage in the past.
Below, we’ll look at the common types of tax that people pay in the UK and help you understand if you can claim, when you need to do it, and how to claim tax back.
How do you know if you paid too much tax?
Before, we look at how you can claim back tax, it’s important that you know if you’ve actually paid too much tax.
What do you need to do?
Well, for starters, you can use the services on the Government website. These enable you to find out if you paid too much tax and help you to check your Income Tax payments and work out how much Income Tax you should be paying.
For example, it might be that you’ve checked your tax code against your Personal Allowance and think it may be wrong. If that is the case, you should contact HMRC directly to confirm. Alternatively, you may be interested to read our recently published guide on how to change your tax code for further reading.
You may also be able to speak to your payroll department, if you are employed, to seek their help. You might need to provide P60s if you think you’ve overpaid tax in previous years.
Can you claim tax back?
Yes, if you’ve overpaid tax you can claim it back. As long as you claim in time. There might be occasions where you’re required to fill out an R38 form. If you do need to fill in an R38 form then make sure it’s correct to avoid delays in your claim. The form consists of 11 questions related to your pay, financial and personal details. You can even nominate other people as recipients of the refund.
The Government website has an online checking service, which you can use here to see if you can claim back.
How long do I have to claim a tax refund?
Wondering if there’s a deadline attached to claim?
In terms of a Self Assessment refund, you have four years to submit a claim for a tax refund or rebate. If yours needs correcting, the Government website has more information on Self Assessment corrections.
If you’re in the position where you need to correct a mistake on your Self Assessment tax return or claim a refund (within 12 months) you can do this by completing an amendment via a letter to HMRC or through the website.
How to reclaim personal tax
There is a form called R38 that you need to fill out if you’ve paid too much tax and want to claim back the over-payment. You can also use this form to authorise a representative to reclaim the tax payment on your behalf. The Gov website has more details on claiming tax refunds.
Reclaiming PAYE Tax
What is PAYE? If you’re not familiar, it’s the acronym for the Pay As You Earn system, which deducts tax from your salary before it is paid into your account. It’s possible if your pay changes throughout a tax year
you might end up paying the wrong amount. That could be because you were not employed for the entire 12 months of the financial year. You can obtain an estimate of whether you have paid too much tax this year with the HMRC Tax Checker tool or this tool for previous tax years.
Reclaiming Self Assessment Tax
HMRC uses a system called Self Assessment to collect Income Tax. This is often for the self-employed but for anyone who has had extra income of some form that is not declared to the tax man.
Can you reclaim Self Assessment? Yes and it is completely free. A Self Assessment tax return shows how much you have earned, and how you obtained that additional money over the course of a tax year. Forms must be submitted, and bills paid before February each year.
For those in the system who may have paid too much tax, you can claim the refund through your tax return. HMRC will deal with your repayment once they have processed your return.
Then you simply have to tell HMRC if you want it paid by cheque, to your account, or deducted from the next tax liability.
Reclaiming Capital Gains Tax (CGT)
Think you’ve paid too much in CGT?
There is remedy here too. You can make a claim for what is called ‘overpayment relief’. You must make the claim within four years from the end of the relevant tax year, stating in writing to HMRC the grounds on which you consider the overpayment or excessive assessment has occurred.
However, according to Tax Aid, there are “strict conditions about overpayment relief and it may not be available in all circumstances”. The charity also warns “you will normally need professional advice to make an overpayment relief claim.”
So, it’s best to speak to a qualified accountant to help with such a claim. Check out our simple guide for more information about Capital Gains Tax.
Reclaiming Tax on Pensions
Can you reclaim tax on pensions? Yes, you can claim a pension tax refund on a small pension lump sum you’ve had. How do you go about it?
The best option is by using HMRC’s online service (Government Gateway user ID and password required) or by printing off the relevant form and sending it to them.
As with pensions generally, there are intricacies to be aware of. Anyone in receipt of serious ill health lump sums needs to use form P53Z to reclaim, in year, any overpaid tax on these lump sums. The same form can be used if you’ve flexibly accessed your pension and emptied your pot. Alternatively, for those only using part of their pension pot, or if you’re not working or receiving benefits, you must use form P55 or form P50Z.
For the full list of forms and details around reclaiming tax on pensions head over to this HMRC webpage.
How to claim back overpaid Corporation Tax
Perhaps you run a business and have discovered that it paid too much Corporation Tax last year? It’s possible to claim it back. In fact, you may even get interest at the rate of 0.5% from HMRC if you’re eligible to claim.
How do you do it? You need to tell HMRC via your Company Tax Return.
When would you get paid interest? Firstly, if you paid tax early (known as ‘credit interest’) and secondly if you paid more than your company owes (known as ‘repayment interest’). One thing to note – the interest is taxable and you’ll need to include it as income in your Company Tax Return.
Reclaiming Income Tax
You might be in a position, if you are working, self-employed or paying through PAYE, to get a tax refund (rebate) if they have paid too much Income Tax. In fact, you may have paid too much on any of the following and be able to claim back:
• pay from your current or previous job
• pension payments
• income from a life or pension annuity
• a redundancy payment
• a Self Assessment tax return
• interest from savings or PPI
• foreign income
• UK income if you live abroad
• fuel costs or work clothing for your job
Reclaiming National Insurance
Another aspect of the tax you pay is National Insurance. There may be times when you overpay, but it’s also possible to claim back on this.
When might this happen? Scenarios include paying NI after reaching state pension age or having multiple jobs. There is an online Government tool for applying for a refund on your National Insurance contributions.
Often, you can reclaim VAT paid on goods and services purchased for use in your business but not for any proportion that is for personal reasons. For example, if half of your phone calls are private, you can reclaim 50% of the VAT on the purchase price and the service plan.
Since 2019, most organisations have to follow Making Tax Digital rules for VAT, meaning they have to keep digital records and use tax software to submit returns.
How to claim tax relief for working from home
So many of us have had to turn our homes into offices during the pandemic. As COVID accelerates the move to remote working, tax relief becomes more and more relevant here too.
Indeed, if you have had extra costs associated with having to work from home, you can claim tax relief. But not if you choose to work from home. Items you might claim for include:
• gas and electricity
• metered water
• business phone calls, including dial-up internet access
It’s important to note when claiming tax relief for working at home, you must claim for only the portion that relates to your work.
There are various circumstances which may mean you need to claim a tax refund. It could be for paying too much on your Self-Assessment or because your PAYE tax code proved to be wrong for the year.
In each instance there are means to make your request for repayment to HMRC, with a number of online tools available on the Government’s website to make it quicker and easier. Please refer again to the information above for details of the tax repayment that is relevant to you.
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